Boeing is set to lay off about 10% of its workforce, approximately 17,000 employees, in response to ongoing financial struggles and a crippling strike. CEO Kelly Ortberg announced the layoffs along with delays in the 777X program and the end of the 767 freighter production. The company faces substantial losses, with a third-quarter loss reported at $9.97 per share and a cash burn of $1.3 billion. The ongoing strike by 33,000 union machinists has halted production of key models, exacerbating the financial downturn.
Boeing, the aerospace giant, is facing one of its most challenging periods, with significant layoffs, production halts, and financial losses. CEO Kelly Ortberg, who recently took the helm, announced a 10% reduction in the global workforce amidst a prolonged strike by machinists. This move comes as part of broader efforts to stabilize the company's financial health and streamline operations amid ongoing product delays and a significant strike that has stopped production of its most crucial aircraft models.
In a series of strategic decisions aimed at recovery, Boeing announced the delay of its 777X jet to 2026 and plans to end the 767 freighter production by 2027 after completing current orders. These decisions reflect ongoing challenges in development and testing, exacerbated by the current machinists' strike which has significantly impacted production schedules. The company also faces new losses in its defense sector, further complicating its financial landscape. These cutbacks are part of a broader strategy to focus on core areas and improve financial stability.
Boeing's financial disclosures reveal a dire situation, with a third-quarter loss of $9.97 per share and a significant cash burn, prompting a 2.3% drop in shares after market trading. The financial strain is attributed to the ongoing strike and production halts, with the strike costing Boeing approximately $1 billion a month. These financial challenges are compounded by substantial new losses reported in its defense business, highlighting the need for drastic measures to preserve the company's investment-grade credit rating.
The layoffs will affect employees across all levels, from executives to front-line workers. CEO Ortberg emphasized the necessity of these tough decisions to ensure long-term competitiveness and delivery commitments to customers. The broader impacts of these layoffs will resonate throughout the aerospace sector and could influence future labor relations and production capabilities. As Boeing navigates these tumultuous times, the focus remains on restructuring efforts and strategic realignment.
Boeing's current crisis is a reflection of broader challenges in the aerospace industry, compounded by internal management issues and external pressures such as labor strikes and regulatory scrutiny. The company's decision to lay off a significant portion of its workforce and delay key programs highlights the severe impact of these challenges. Moving forward, Boeing's management must navigate these difficulties with a focus on recovery, financial stability, and restoring trust with stakeholders.